Mandatory Climate Disclosure - The Next Necessary Real Estate Disruptor?

Mandatory climate disclosures could change the real estate landscape for the better.

There have been rampant de-carbonization efforts across cities, right from new building codes to taxes for incentivising green building stocks. 

Yet, global temperatures keep rising as we speak, with these limp-biscuit efforts not yielding fruit.

Who’s going to drive sustainable real estate?

Investors of course. They will be propelling the shift towards de-carbonised commercial realty.

How will this happen?

The U.S. Securities and Exchange Commission (SEC) proposed climate-linked risk disclosures this March. 

💡 If the law goes through, companies raking up funds from U.S. investors will have to disclose climate-linked risks and other metrics associated with their developments.

💡 The EU has come out with its Sustainable Finance Disclosure Regulation (SFDR) and CSRD (Corporate Sustainability Reporting Directive) guidelines in 2021, responding to investor pressure for ESG developments. 

💡 SFC (Securities and Futures Commission) and the HKMA (Hong Kong Monetary Authority) will require entities to share their ESG standards with investors.

What it could entail

🍀 Bigger implications for real estate players and their methods of raising capital.

🍀 Better climate-risk disclosure and information standards.

🍀 A push for real estate to adopt new systems for accelerating de-carbonisation by 2030.

Why it’s important

1️⃣ Real estate contributes around 40% of greenhouse gas emissions worldwide. Account for operations, materials, and related activities and what you get is alarming. 

2️⃣ While the proposal would disrupt the sector initially, many companies already voluntarily disclose ESG and sustainability data. 

Your Takeaway: With considerable green building and sustainable infrastructure already available to developers, 30/40-year blueprints are not logical anymore. The time to act is NOW.

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